How do I report fraud/embezzlement/sketchiness in a nonprofit foundation?
August 3, 2010 6:37 PM   Subscribe

I'm a contracted employee at a non-profit foundation. They seemed decent at first but now there are a lot of ethical/moral issues that are not okay. What organization/entity can I tell?

The company was a major funder for over fifty valuable programs and organizations all over the state. Now they want to funnel all the money into a pet project that'll guarantee they all get ridiculously paid. The foundation will exist in name only so that the CEO and consultants can keep getting paid.

The board of directors has members of their family coming into this project to also get paid. The CEO is friends with the board members that are getting kickbacks from this project. Those board members are why the CEO received his job.
The CEO joined the company a couple of years ago, before I arrived, and it was a highly contentious decision that made people quit. He previously ran a couple of nonprofits into the ground. None of them have previous experience in the field of the pet project nor does it have anything to do with the company's mission.

Four people questioned the pet project and were fired. Then the staff meetings stopped and event the illusion of transparency went away.

The CEO has hired some of his friends as sixty dollar an hour consultants. They go to expensive meals together all week long for no business reason.

The last person fired handled the bills and asked questions like "Why is there 2000 dollars worth of restaurants on this VISA bill with no receipts? Can you tell me about the travel expenses to see a consultant on the other side of the country? Why did we pay this consultant so much?" That person was replaced by _another_ consultant.

I know they cook the books, pay people under the table, the works. How do I blow a whistle here? Who would I even tell that would care? I have no hard proof of embezzlement, just what I've been told by people that were fired.

My time here ends in about two months. I feel morally/ethically obligated to do something. Any suggestions or personal stories would be greatly appreciated.
posted by anonymous to Work & Money (21 answers total) 12 users marked this as a favorite
The IRS would like to hear your story.
posted by seanmpuckett at 6:42 PM on August 3, 2010 [9 favorites]

You'll probably get more specific suggestions from others, but if you're in the US, I'd suggest calling the State Attorney General's office.
posted by MexicanYenta at 6:44 PM on August 3, 2010 [2 favorites]

This is the stuff of dreams for investigative journalists. Have a decent newspaper near by?
posted by qxntpqbbbqxl at 6:44 PM on August 3, 2010 [3 favorites]

are the projects they support politically polarizing? well known opposite leaning bloggers would like to hear your story, especially with midterms coming up.
posted by nadawi at 6:46 PM on August 3, 2010

I think the IRS and the state AG are both fantastic suggestions.

Document everything you possibly can. And especially if you're going to be a whistleblower, keep a dated journal of everything you do, say, and witness. This is as much for your own protection as anything.
posted by kavasa at 6:47 PM on August 3, 2010 [7 favorites]

State AG's office absolutely.
posted by micawber at 6:49 PM on August 3, 2010 [1 favorite]

On your communication with the authorities listed above, you may wish to cc: your local office of the Better Business Bureau. In my city, they have a staffer dedicated to keeping tabs on local non-profits.
posted by kelegraph at 7:14 PM on August 3, 2010 [1 favorite]

Please please please call a journalist! If you contact me (through my profile) I can put you in touch with folks.
posted by klangklangston at 7:19 PM on August 3, 2010 [2 favorites]

Are they receiving any grants, particularly from any government organizations? I have recent experience with this issue if you want to drop me a memail.
posted by kaybdc at 7:20 PM on August 3, 2010

Yes. All the above.

Thanks to my AG's office' advice, I contacted the IRS and got FOIA's on the non-profit(s) I was looking at.

I quietly passed the (damning) info garnered to my city's Dept Of Investigations. A few months into that investigation, the feds took over.

People went to JAIL. No one ever knew it was me that started the ball rolling...

Win! Win!
posted by jbenben at 7:22 PM on August 3, 2010 [19 favorites] is another resource you can use to possibly strengthen your case or uncover further fraud--check out the organization's 990 forms and see if what they're filing (IF they're filing) matches what's going on.
posted by availablelight at 7:36 PM on August 3, 2010

Document everything. Sit down every night and write down what you've seen and heard that day. Try to write down numbers and figures from certain situations. Keep track of names, relationships, and the work hierarchy. And, assuming you're in the US, if you live in a state that isn't on this list, you live in a "one-party notification state;" that means that you are legally allowed to record conversations you have with any other party without telling them you're doing so. If you're in a one-party notification state, you may consider discreetly recording your phone calls and even personal conversations you have with other people.
posted by koeselitz at 7:38 PM on August 3, 2010

More info:

Out of college, I worked as an intern investigative journalist. While they (media) have their own agenda... I COULD NEVER HAVE SENT THOSE FOLKS OUT OF POWER AND TO JAIL IF NOT FOR THAT TRAINING.

This involved NYC Gov't. No small feat.

My point is... I was cagey about the identity of my target to the AG's office whilst getting their advice. On the city level, I only passed the info on to someone politically motivated to bust the criminal party - someone in my state or local's hierarchy with favors to the criminal party might have buried the damning info. You know, since it probably (even peripherally) might've involved them.

You probably won't face that much politics in your situation, but it is something to keep in mind, generally.

Don't wait for a journalist to do the very easy work for you.

It took me 4 phone calls. The hard part was waiting for the FOIA's and deciding exactly what to do with them.

On the day i made my fateful 4 phone calls.... other folks on the right side of things were giving an interview to the NY Post regarding a symptom of the corruption, not knowing the real issue at hand. I had been the spokesperson up to that point. Instead of the interview that day, I got to gathering evidence. My group's gripe got some press. I got jail time for the criminals.

Everyone did their part, but I kept my own counsel during this time.

If you've been gossiping with long-term employees - STOP. If you are ready to act, you should keep it to yourself from now on.

Sorry for the ramble. Hope it helps.
posted by jbenben at 7:38 PM on August 3, 2010 [8 favorites]

[Sorry for the boldy shouting, that was totally unnecessary.]
posted by koeselitz at 7:40 PM on August 3, 2010

Don't contact the Better Business Bureau - this is certainly going to be a legal issue so follow the advice of everybody who directed you to the state's AG office. Allow the proper channels a chance to address this situation before you call on the journalists. Good luck!
posted by zenon at 8:31 PM on August 3, 2010

Turn this over to a journalist and then find another job, you don't want to be associated with this organization.
posted by HuronBob at 8:53 PM on August 3, 2010

It's the AG, as others have said. That's the first line of contact - that's because it's the state that actually charters nonprofits and is responsible for nonprofit oversight. This problem is theirs to sort out. The IRS is only interested in the taxable elements and tax crimes - but there are other fiduciary problems here. The IRS will likely also be on your list at some point, but start at the state.
posted by Miko at 8:54 PM on August 3, 2010

There are possible whistleblower financial rewards for people who report tax fraud or misuse of government funds (e.g., if this organization provides services to the government). If you are interested in this, contact the most reputable False Claims Act lawyer in your state before you disclose to anyone else.
posted by yarly at 5:45 AM on August 4, 2010 [1 favorite]

If you are going to do any of these, please please do so anonymously.
Otherwise you would be dealing with this for the rest of your life
posted by WizKid at 1:31 PM on August 4, 2010

Ask the following question: is this behavior illegal or unethical? The state AG may be interested (based on how many big fish she already has on the line) so don't bank on a lightning response. To my understanding, small foundations or family foundations are rarely examined by the state AG or the IRS. They do start to look if money is not granted out in certain percentages (against the corpus of the endowment).

When people start to get fired for questioning expenses, in my experience, the organization is in for a rollercoaster ride. Part of organizational stewardship is actively examining/questioning the day to day work. This is done not to focus blame but rather to eliminate waste, inefficiency and to strengthen the organization's reputation (with employees and the public).

As Gatsby said "The very rich are not like you and me." It is probably time to sharpen up the resume.

Good luck.

**I met a woman at a conference who was a former employee and whistleblower at a non-profit that I work with regularly. She was fired by the unscrupulous executive director after she exposed his schemes. Her willingness to come forward and state the truth lead to the executive director ultimately resigning and the organization taking a new direction. I knew the story but didn't know HER story. That took guts on her part but lots of people are better off now.**
posted by zerobyproxy at 4:45 PM on August 4, 2010 [1 favorite]

If they have used any ARRA money you should report them here
posted by birdbone at 5:43 PM on August 4, 2010

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